New Jersey Enacts Legislation Establishing a Shared Responsibility Tax
July 2, 2018
Last year, President Trump signed legislation that effectively repealed the “penalty tax” for not having health insurance for tax years beginning on or after January 1, 2019.
On May 31, 2018, Governor Murphy signed into law the “New Jersey Health Insurance Market Preservation Act,” which establishes a “shared responsibility tax” for New Jersey residents who do not have health insurance. Following is a summary of the act’s provisions:
- It is effective January 1, 2019.
- It requires New Jersey residents to have health insurance with minimum essential coverage. There are exceptions for religious objection, income under $10,000 for single filers and $20,000 for married filing jointly, or hardships.
- The New Jersey penalty tax is generally equal to the penalty tax that was repealed by President Trump for federal tax purposes.
- The amount of the tax penalty, in general, is equal to the greater of $695 per family member ($347.50 for persons under the age of 18), up to a maximum of $2,085 or 2.5 percent of household income, whichever is greater.
- Businesses and insurance companies will be required to file reports with the New Jersey Division of Taxation.
- The New Jersey Treasurer will be issuing regulations defining the requirements and procedures for reporting and paying the penalty tax.
The NJCPA will provide additional details as they become available.